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Opinions Paul Harris, CFA
Diageo PLCDEOBUYDec 31, 2014
$114.09
Stock price when the opinion was issued
$80.42
As of Jun 18, 2026. Market Open.
food processing
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DON'T BUY
On Nov. 10, they issued an operating profit warning, because they're getting killed in Latin America and the Caribbean, because consumers are trading down to cheaper brands. Younger people are drinking less hard alcohol than previous generations, verified by a recent poll. One factor is the legalization of cannabis. Another is that companies have been hiking liquor prices too often. Also, the new weight-loss drugs reduce craving for booze.
food processing
TOP PICK
By far the largest distributor of alcohol beverages globally.
Focusing on premium brands(higher margins).
Sales rising which creates good profits.
Able to buy emerging brands such as George Clooney's vodka brand.
Rebound in travel increasing demand for alcohol.
High dividend yield is good for investors.
Not worried about looming recession, but high end products/brands won't be affected.
Lorne SteinbergOwned
food processing
PAST TOP PICK
(A Top Pick Jul 28/21, Down 6%) Is the fastest-growing spirits/drinks company now with revenue growth nearing 10%. It carries a huge portfolio of premium brands which are immune to a recession. DEO is a core holding. A world-class business.
Lorne SteinbergOwned
food processing
TOP PICK
#1 player globally. Focused on higher-end brands in all of the sectors they're in. So they can charge more, and their margins are growing. Spirits are gaining space on the shelf. Organic growth of 4-5%. Beverages are all about distribution, and they have the best. No one like them in the sector. Dividends grow over time. Yield is 1.58%. (Analysts’ price target is $200.07)
Lorne SteinbergOwned
food processing
TOP PICK
It is being impacted by CoVid19 because sales are down in China and fewer travelers aren't buying them. They have great brands, margins and solid dividend growth. They should do well in a recessionary environment. It is a great opportunity to get into a great business that has been too expensive for a while. (Analysts’ price target is $179.61)
Lorne SteinbergOwned
food processing
BUY ON WEAKNESS
A alcohol drinks company, trading at a high 21x earnings. Well-run. They've made and integrated good acqusitions, and have spent money on developing new products as well as marketing/sales. The U.S. is their best market. Great free cash flow. A lot of these companies are thinking of cannabis. DEO sells all over the world. Buy on pullbacks--they have periods when margins reduce when they launch products with marketing.
food processing
A very good company, 21 times earnings and 2.8% dividend. The drinks business is a great cash flow business. DEO-N is 60% owned by the top 5-6 guys. They compete with a lot of local producers. Their history has been to do deals and they will do this with local guys. Liquor consumption is rather stable, but moving from clear to dark liquor. They are well positioned with products in both ranges. As people get wealthier, they drink a lot more alcohol. This is far more prevalent in the developing world. The one risk is how they estimate their marketing expenses.